NEW ORLEANS, Louisiana (CNN) -- Patrons at Mat and Naddie's restaurant in New Orleans may start with mouth-watering shrimp and crawfish croquettes. Or if they are feeling a tad more adventurous, they might try the artichoke, sun-dried tomato and roasted garlic cheesecake.

Stephen Schwarz has received a grant and low-interest loan from the state to help keep his business going.

What diners probably don't know is that in a down economy, it is a constant struggle for restaurant owner Stephen Schwarz to keep Mat and Naddie's up and running.

"I haven't gotten to the point where I have said, 'Oh my God, I'm not going to make payroll this week,' " Schwarz says. "I guess I am more conservative. I always want to keep a certain amount of cash in the bank."

Schwarz is one of the lucky ones. His restaurant is in the city's uptown area, near the riverbend, for those familiar with the city's quirky geography. It's one of the few areas of the city that did not flood.

He had Mat and Naddie's back up and running and turning out what he calls "Modern Louisiana" food just three weeks after the storm.

But in the past few years, a city that prides itself on amazing cuisine has seen a healthy spike in its number of restaurants.

Before Katrina, there were about 800 restaurants in New Orleans. Now, the number is closer to 1,000.

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Tourists, volunteers and emergency workers have been among the patrons frequenting all those restaurants. But the recession is putting the brakes on the number of people with disposable income heading to New Orleans.

So entrepreneurs like Schwarz are trying to stay afloat.

"It's a matter of how much stamina we can have, and how long we can last before things turn around," he says. "How long can I continue to be creative about how we do our business so that maybe we can get some infusion of cash somewhere else."

Schwarz also operates Michael's Catering.

Before Katrina, it was a relatively small operation that provided a nice little amount of financial padding each month.

Things are different now.

"In the last year, it really got to the point where catering is 40 percent of our business," Schwarz says. "It is almost equal to what we do at dinner [at the restaurant]. Before, dinner was about twice the volume of catering."

At a recent charity event on the mezzanine level of a New Orleans hotel, Michael's Catering was among 15 or so entities providing a taste of the city to patrons.

It was a way to get some exposure, but the food, which was pulled pork from a roasted pig, had to be mouthwatering.

"It's very important, because it really gets your name out there," says Krystan Hosking, catering manager for Michael's.

And there was also pressure.

"Word of mouth is very important, because if you get one bad review, there are tons of restaurants that people are just waiting to try," she says. "So if somebody gives you a bad review, they aren't going to give you a second chance."

Schwarz has been creative coming up with the funds to stay in business.

This year, he received a $10,000 grant and a $40,000 low-interest loan through the state -- part of Louisiana's recovery effort to keep small businesses up and running.

Unlike some areas of the country that have seen the economy collapse in a matter of weeks, Schwarz says New Orleans is coping with a gradual decline.

"It's going to mean that we are going to have to keep on somehow, keep our capital here, so that we can cover this slow eating-away of losses." Schwarz says.

Between the catering gig and the restaurant, Schwarz has about 28 full- and part-time employees.

Schwarz himself is a transplant. He came to visit about 30 years ago and never left.

He says he's proud that New Orleans residents tend to turn their backs on chain restaurants. But just because Mat and Naddie's has been a presence near the riverbend for a generation is no guarantee it'll be there after the recession.

"Even if we do go out of business," Schwarz says, "or if a lot of places like us go out of business, I hope that the memory of the people who live here, or their memory of what they like, will stay with them -- and those places will come back."